City cleared to take ownership of Sterling site

WILKES-BARRE — A Luzerne County judge ruled against CityVest over a lien on the former Hotel Sterling property on Friday, paving the way for the City of Wilkes-Barre to take ownership and potentially leave the county government holding the bag on a $6 million mortgage.

Luzerne County Judge Michael Vough on Friday signed off on a judgment against CityVest for $569,112 after the property’s nonprofit owner failed to respond to claims Wilkes-Barre officials leveled against it.

The ruling means the city will move forward with a public sale of the property and try to scoop it up, despite the county’s $6 million mortgage, assistant city attorney Bill Vinsko said Friday.

“We will move forward to now start the proceedings to take control of all the Hotel Sterling properties,” Vinsko said.

The dilapidated hotel on River Street was demolished last summer after CityVest failed to preserve and develop the building after receiving $6 million in federal funds to do so. The federal Department of Housing and Urban Development is seeking to have the county repay that money, saying the project failed to produce its intended results.

The city funded the demolition, and last November it filed a lien for $470,754 to cover the costs. It previously filed a $76,148 lien to cover the costs of traffic barriers and other issues resulting from the building’s state.

As of Friday, CityVest had failed to respond to the filings, while interest and fees brought the amount due to $569,112.

CityVest’s attorney, George A. Reihner, said simply that the nonprofit knowingly chose not to contest the lien. He deferred further comment to Vinsko.

Although the county has a $6 million mortgage on the property, the city has “first lien position” because its nuisance abatement lien supersedes the county’s claims to the property, Vinsko said. The city intends to begin foreclosing on the property and bring it to a public sale, he said.

“(CityVest was) willing to proceed to give the property over, but the only issue is the county liens,” Vinsko said. “Because the county and the city couldn’t come to an agreement a while back, the only way to proceed now is to take it to a sale. Otherwise, if they gave it to the city now, we would have it subject to the county’s lien. When we take it to sale, the county’s lien is extinguished.”

A business called LAZ Parking is currently using the property as a paid parking lot. CityVest still owns the property, and the county is not getting any of that revenue despite CityVest’s debt. County solicitor David Pedri, who has been working to get a look at LAZ’s financial books, said Friday evening that the county’s position remains the same.

“This doesn’t change anything. We’re in the same position as we were since the day that the city condemned the property,” Pedri said. “After the sale, we receive the funds after they get repaid their lien.”

That remains true as long as a bidder goes higher than the lien the city has on the property, but not if the bids fail to surpass the city’s lien amount, Vinsko said.

“If nobody bids on the property and we take it back, their lien is extinguished,” Vinsko said, adding that the city would only have to pay a bid of fees and taxes to take over the property.

The city fully intends to acquire the property at the sale and then develop it, he said, deferring comment about development plans to Mayor Tom Leighton.

Leighton did not immediately return a cellphone message Friday evening.

570-821-2058, @cvjimhalpin

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